Chile Forum

I hope I started this in the right section (sorry if not)
That being said I live in the states and buy and develop property then sell it at a profit (hopefully) I hold a realestate brokers lic. in Illinois therefore I understand the process involved in gathering relevent info concerning "subject" propertys .
I have been trying to research the Renaca market but find prices to be all over the board for property. The local "agents seem unwilling or unable to answer questions so I will try here.
Firstly I would like to know if it is possible to find out what property sold in the area to do a comparitive market analysis?
Secondly how much are property taxes on the subject property and do they rise as they in the states when the property is sold?
Third should I use a realestate agent.?
I will have other questions but for now any help will be appreciated and thanks in advance.

I'll try some of this.

First, we find the real estate agents very rarely of use. There are some good ones, but it takes a lot of time to find them in Chile. Even then we only know one or two that really really pass us the information we or our clients need. We overall do not expect them to do anything to sell a property, but collect their commission.

Second, property values are very very hard to nail down. The community perception of property values is often completely out of touch with the real international or even national market of the property.

We have looked at properties in the Patagonia that the seller was asking 15 million+ pesos a hectare, 3 hours by dirt road from the nearest town. He had burned all the trees to the ground for pasture land, and not even finished clearing it for pasture land. The entire property was a sand bar created by the river, and 80% swamp land. There was one old growth tree left on the property.

We wanted to make a clear point in the community that if you cut your old growth trees, don't expect to sell it to a foreigner. Every time we value a land for consideration of listing, we drive home to the owners that the natural state of the land is the best selling point.

REAL market value internationally for that property according to us in that area was 100,000 pesos. That is what I offered him not to cut down the last 1,000 year old tree still standing, and he could keep the rest of the property.

We in general, and this is not a hard and fast rule, assume that without some sort of water, great view, native forest, or really killer quality construction, no foreigner will touch the property.

Location is important, but surprisingly to most Chilean sellers it is not what they would expect.

My best example right now would be upper Los Condes on the mountain side overlooking Santiago. The most expensive houses in Chile are being built there, by the richest Chileans. For a Gringos it is untouchable. It is in the smog belt where all the pollution of Santiago floats to in the afternoon and can not rise to go over the mountainside. Buying there is guaranteed death sentence in 10 years for you and your family from all sorts of health problem, yet that is the most valuable property in Chile right now.

Another would be downtown Pucon. It is a Volcanic Red Zone, that moves with the political winds. It is also some of the most valuable property in Chile.

Buildings are also another thing to watch out for. You can have 10 buildings on the same street, and not a single one is of even near equal value construction wise. Each building you look at should have a engineer asses the state very very carefully.

The name of the game is to asses the local market value against longterm value. Ask, if all else failed, what would you be left with?

Buy where you want to live. Apply the same investment guides you would at home, eventually Chile will follow or at least you will have what you consider to be a great piece of property to enjoy.

We've found similar surreal pricing expectations here in Portugal. These owners end up sitting on their overpriced listings for years, but hey, surely they're rich, look at how much they're putting their house up for sale! It seems whole countries are yet to be educated about proper notions of value and liquidity. No MLS to share listings, useless real estate agents so everything is FSBO, what they don't realize is that everyone loses. They just don't get how a marketplace works.

You end up hearing silly things such as "but it's different in Portugal". No it's not, and you'll never sell that piece of crap at that price which would pay for a mansion in the U.S. The era of real estate loans with no capital downpayment and dirt cheap interest rates is over, and all that nonsense is going to be wiped off. The confusion between bubble conditions and fundamentals will be cleared up, and that's a good thing.

Admin.. Thanks for the reply.
I find the agents to be unhelpful to say the least, One went as far as to deny the existance of property taxes at all, others would not show certain houses etc.
This brings up one other question you may be able to answer and that is this ...When I locate a house thru a website of a realestate company can I approach the owner directly? and if I were to do a deal will I be required to pay the realestate co. a commission?
As far as Las Condas is concerned I found the smog to be a deal breaker not to mention the prices, however the lack of research available to the consumer makes it difficult to accertain price (value being that which you determine).I guess as long as I know I am not over looking available information then I feel more at ease.



Otravers..
I belive in Portugal as indeed in Ireland the glory days are over in regards to realestate (for awhile at least).

Is there such a thing as an appraiser. Are there public records that can be consulted to accertain what people are actually
paying for property in a given area. if so where would they be?

Bear in mind too that lots of agents don't even have the rights to sell properties they advertise. They kind of operate with the concept that if they can hook you in, then they poach the property. Particularly around Pucon, there are also people who have their properties "listed" with an "agent" (I use both the terms loosely) because their neighbours have done so for an exhorbitant amount and they are trying their luck, or because an "agent" suggests they do so. When it comes to crunch time, they were just testing the water / there are inheritance issues / the land is mapuche / they don't even know where the boundaries are / it's not even their land ... what is advertised often doesn't really exist, one way or the other. This is another one of the reasons it takes so long to find the property you want to buy! Lots of dead ends.

The municipalidad does have property "valuations" on file. Admin will have more info about this kind of thing I guess, they're the pros.

Yea, we get asked constantly by clients who could do an appraisal on a property in Chile.

Well, the banks have appraisers you can hire. The problem with them is that they are often based on what a bank would want when giving a loan to cover themselves. It really does not capture the market value of what sellers perceive their property to be worth, what a Chilean buyer would pay from outside the area, what a local buyer would pay inside the area, and what a property is worth to foreigner coming from outside the country and with an unlimited choices in the World market or Chilean market.

We have seen properties in the deep Patagonia that no Chilean from Santiago would pay anything for or even a local farmer for one reason or another, but from a Gringo perspective it is pure one of a kind heaven and price is no issue.

When we appraise property for listing purposes on our sites, we tend to take the view of what a foreigner would pay for it and how much interest it would grab. The property has to have something special about it (e.g. price, building, location, view). We are not real estate agents, and we don't get commission. If the property is not an attention getter then we don't list it.

In appraising properties with structures, we tend to go with what would an insurance company pay us if the building burned down to rebuild it stick for stick.

If the seller is asking 50 million and the building cost 25 million to replace or build better, then what is the property worth? Would we pay 25 million just for the property? Not, if say the property next door, all things being equal, could be bought for say 1 million a hectare and we could put the same or better building on it for 25 million.

You can go look at the titles at the local registry for recent sales, but that will only give you a sort of base estimate. The final sale price from one property to the next could be what it is for all kinds of reasons (e.g. buddy to buddy sale, no water access, some sort of local fad buying). It would really be an apples and oranges comparison without seeing the properties yourself.

At the end of the day, remember that almost every single real estate market in Chile is a buyer's market right now, with very few exceptions. There is just way more property for sale then there are Chileans able or willing to buy because Chile is such a big country.

The best advise for getting a feel for property is to take your time and shop.

This isn't so different than the little Puerto Rican island I live on where most of us (local and long time expats) own/live on "UNTITLED" property (yeah! I know "What" under the US flag you must be kidding!!!! )And as a licenced broker/REALTOR i do get it ,and am not surprised about much any more, just curious. Question??? Why do I need 3 years of US tax returns if I'm willing to pay cash (according to Puelche)

Dose anyone know if it is possible to "tear down" an existing house with the intent of replacing it with a new one?
I have been researching sites and feel that a shack on a good site may be cheaper to purchase than a clear site in a less desirable location.

Thanks in advance.........

admin wrote:

REAL market value internationally for that property according to us in that area was 100,000 pesos.

Charles,

Do you mean100,000 pesos per acre or per hectacre?

Is this a fair price for agricultural/ forestry land beyond the boundrys of metropolitan areas?

sorry about that. No, what I meant is that persons had destroyed the value of their property so badly that the property was only worth 100,000 pesos. It was not a great property to start, but he wiped out all the trees and even appeared to have poluted the swamp that was on the property. Yet, he was asking 15 million pesos a hectare. Really good properties in the same area go for about 500,000 pesos to about 2 million pesos a hectare.

If you go way way way down in the Patagonia he will still find properties in about the 200,000 CPL to about 500,000 CPL per hectare for properties starting at around 100 hectares and up size. We know one right now that is 10,000 hectares for about 66,000 CPL per hectare. You need an airplane to see it.

More typical for a small property of a few hectares in southern Chile will be around 5 million to about 15 million a hectare, depending on fetures such as water front, access, and a million other things. There are cheaper properties, and more expensive, but I would say that would be like the average or medium.

it is possible to tear down, but you still need to get your building permits. I did once see a garage in Temuco where they had propped up the roof with 2x4's and where completely rebuilding everything under it. The only thing I could figure was they where doing it to keep the permits for the building.

admin wrote:More typical for a small property of a few hectares in southern Chile will be around 5 million to about 15 million a hectare, depending on fetures such as water front, access, and a million other things. There are cheaper properties, and more expensive, but I would say that would be like the average or medium.

I still plan to visit this summer when I have a few weeks off in Korea (for you, it'd be winter). I was just doing the math, as an American, it's hard for me to relate to hectares, but the conversion rate is 1 hectare = 2.47105381 acre. At this time, the exchange rate from Yahoo is: Mar 27, 2008........439.15 = $1. Let's suppose 7 million per hectare, this would work out to $15,939.88/hectare or roughly $6,430/acre. Are you sure these numbers are correct, or are my numbers off? You must take into consideration of the coming recession, I'm sure prices will go lower. My question is, most of my money is held in the form of krugerrands. What kind of hoops would I have to jump thru to pay for land with gold coins? Or at least put them down as a deposit? Especially, as the price of gold is going up (with a declining dollar) and the price of land will probably go down?

Hi Spamghod....

The price you pay per hectare can fluctuate wildly. Typically, the smaller the piece of land, the more you pay, PER HECTARE, yet not always. We paid approximately $12,000 USD for just under two hectares. Other properties I've seen - larger parcels of say 25-40 hectares, dip down much lower in the price per hectare range.

What we did was decide 1.) how much we could afford to spend on a piece of property, 2.) What we wanted in our land (a river, lots of trees, stunning views, access to utitlities, not close, but close enough to a town), and 3.) how much land was necessary to meet the lifestyle we wanted (no `close neighbors, room to roam, but not so much that we'd spend all our time managing the land). With this as a guideline, we then "valuated" the properties we looked at.

The thing that we appreciated about allsouthernchile.com, Charles and Zandra's business, is that they aren't real estate agents. They have no interest in selling the properties they list on their site. It's a free service, so to speak. Their business is providing legal services and relocation assistance. We looked at a lot of the properties on their site, and ultimately found a property on our own. We did hire them to handle all the legal work on our purchase, and thus avoided future problems and and headaches down the road. Working with real estate agents here (and not all are bad, so let me get that out of the way) is that they are eager for their commission. Period. In reality, they have no incentive except that commission...so they aren't concerned about issues and problems you may encounter perfecting the sale.

I would say, make your priority list, look at properties, and once you find that perfect place, contract with a competent attorney to do the research, check for problems, write your contracts with YOUR BEST INTEREST in mind. I would never rely on a real estate agent to evaluate property, or advise on legalities and issues surrounding property. Never. But that's just me, and my experience. Happy Hunting!

Vicki

Using gold coins might be hard, but we have seen sellers accept stranger things.

Those prices are right. We handle purchases constantly around Southern Chile, and are constantly running radio advertising in different areas to gauge the property market and find out what is available. Running rates in Southern Chile for rural property are about 1 million a hectare at the low end when buying large tracks of over a 100 hectares to about 40 million a hectare in high demand tourist zones like around Puerto Varas. About 4 million to about 10 million would be some sort of average when buying properties under 100 hectares for rural agricultural land in Southern Chile. You are doing good if you find something with water frontage for under 5 million a hectare. South of La Junta you start running in to properties in the 500,000 peso range, but we are talking about tracks of land in the 400 hectares to 1,000 hectare range. Chiloe island still has some relatively small lots that are fairly Cheap. We have had some clients land a few hectares in the more remote parts of the Patagonia for around 2 or 3 million a hectare, but you have to spend some time looking and talking to people.

As for the recession, Chile does not have one. The rest of the World has one. The real estate market and economy in Chile was one of the only markets in the World not touched by the mortgage mess because the banks are so tight with their lending rules to start with. Chile did not get hammered like Panama expat market or the Southern Spain expat market because its own internal real estate market is the dominate price force, not foreigners.

Chile made the right move. Now there is a rush in to Chile for the agricultural sector. Areas around Santa Cruz wine country where a lot of fruits for export are produced are going for around 10 million to 15 million a hectare for farm land. It is to valuable to build anything on it almost. There is also a lot of safe haven buying going on because the interest rates and strength of the peso. Expats buying property for living or retirement are a very small drop in the bucket of what is going on the real estate industry here. Overall, I would say property prices have been holding steady this year. So, in a sense that is a decline in price.

We do have a professional appraiser now on our team. Depends a bit on the logistics, but an appraisal will run you about 350,000 CLP plus expenses. The numbers though that you will get for any given property from an appraiser will be conservative bank or mortgage values. They are likely to be very far from whatever a seller dreams a property is worth, real or not.